Ted Simons: State and national reports suggest that cap water users including those in the greater Phoenix area could face shortages in coming years. Tom McCann is assistant general manager for the Arizona project. Good to have you here. Thanks for joining us. First let's talk about this idea of a forecast from cap and suggesting there might be water shortages as soon as five years. What's going on here?

Tom McCann: Actually, we're looking at the possibility of shortages as early as 2017, maybe even 2016 but 2017 looks like a pretty good bet. The key is who that shortage is going to impact. That's where some of the reports in the press haven't been exactly right. The cities that get water from the cap are not going to be impacted by those shortages. We have a priority system within the cap. The cities are some of the highest priority users we have. The shortages that are going to come, we know how much they are, we know what the volume of reduction is. They are primarily going to affect agricultural users in central Arizona.

Ted Simons: So if not in a couple of years or within five years. If things get better with this drought, which I want to touch on here in a second could eventually urban users be impacted?

Tom McCann: Sure. Eventually. But we don't see that intersection between the reduction in supply and the growth in demand by the municipal users and high priority Indian users. We don't see that intersecting to a reduction for probably at least 10 to 15 years. It's hard to see that happening before around 2030.

Ted Simons: Are cities banking water? Is enough recharged water there? Are the lakes and reservoirs with ground water? Is that -- what’s happening here?

Tom McCann: It's not even that really. In 2007, the secretary of interior, who is the water master for the lower Colorado river, adopted guidelines as to how the river would be managed. Part of those guidelines was an agreement on reductions during times when lake Mead was falling. We agreed on specific elevations and volumes of reduction. We could look at the maximum reduction under there, which is less than -- still a lot of water but almost half a million acre feet from cap, but we have about 1/2 million acre feet that we take off the river every year. We still have more than enough water left over even under that maximum shortage to meet all the needs of our high priority cities.

Ted Simons: Let's get to -- the reports and your -- it sounds like the forecasts have changed. Have they changed? A. And B, if they have is it because of the drought?

Tom McCann: I think what's changed is the -- the expectation about when lake Mead will turn around. We have seen a decline in Lake Mead, 120 feet or more since year 2000 because of the drought, really because we have not gotten the big, wet years we used to have. You can say that's because of the drought or you can say it isn't, but either way, we have gotten a normal release from lake Powell throughout that period, yet Lake Mead has declined. That's one problem we're focusing on now. We as a lower basin using more water than we get every year, so we need to work on correcting that deficit that we have. But aside from that, yes, the water levels have come down. That's what the reservoirs are there for. We have been blessed really with two large storage reservoirs in our system, Lake Mead and lake Powell. They can collectively hold almost four years' worth of flow in the river. That's allowed us to weather this drought.

Ted Simons: We should explain quickly again, the water comes into Powell, Powell releases into immediate Mead, Mead releases into the Colorado River and we get the CAP water from Lake Mead. Sounds like Mead gets 8.2 some odd million acre feet per year from Powell yet we're using 9 million. That's a structural deficit. That can't last.

Tom McCann: yeah. It's a little more than that. The deficit is 1.2 million acre feet. Historical quirks, evaporation losses in Lake Mead not charged to anybody. There's a long story as to why that's the case. We have Mexico that we owe, the United States, we owe 1.5 million acre feet every year. The upper base why not and release from Powell gives us half, the lower basin has to provide its half. That’s 750,000, we take it out of storage, so we take out the evaporation and deliveries to Mexico out of storage and as a result lake levels go down.

Ted Simons: Again, between the drought and demand here, just taking too much water out of Mead, more than is coming in, what does cap want to see? What can be done here?

Tom McCann: There's a lot of things that can be done. There are going to be challenges. The biggest challenge is getting our sister state across the river to recognize that they have a role to play in this as well, that it's not all on Arizona. But we need to collectively reduce our demand. We can do that through conservation, improving efficiency in various deliveries. We can augment our supply. We can do desalination. A lot of those things are expensive. Those are a little bit further out. We can tighten up the system. We have losses there, things like not operating a desalinization plant. We can fix things like that and help close this deficit. We don't have to do the full 1.2 million to really make a difference but we need at least half or two-thirds of that to really get more in balance.

Ted Simons: As far as the seven states that work together, the agreement on the Colorado River, are these seven states working together? Is there increasing friction with the drought and the whole 9 yards?

Tom McCann: Oh, I'm sure that there's a little more friction now than there has been when you're in wet years. Nobody seems to mind that too much. But there is good cooperation among the states. We have been working on this, talking for better party of a year on this specific issue that we're looking at, declining levels in lake Mead. Which is -- we're just not there yet in terms of everyone agreeing that to the magnitude of the problem and to the solution.

Ted Simons: If we do hit these shortage, could be a year or two away, agricultural users, will they be first impacted?

Tom McCann: Central Arizona agricultural users. It's a good distinction. There's a lot of agricultural use in Yuma area, those are senior to cap, so they are not going to be impacted by the shortages. People shouldn't be worried that we're going to lose our food if we hit this shortage, but the users in central Arizona that have been dependent on cap water but are already planning on reductions in that supply that have been forecasted ahead, they may have to transition back to ground water or something like that.

Ted Simons: And if you are a watcher of lake Powell which feeds Lake Mead which gives us our cap water do you watch more than anything snowmelt in the Colorado Rockies?

Tom McCann: We watch the snowpack in Colorado and Utah. This year was about normal, a little above normal but the normal has been adjusted because of the drought so it’s pretty close to the old normal so I just call it normal.

Ted Simons: Those of us who think we could have a good monsoon, not as much of a factor, or El Nino, could be a wet winter, still not much of a factor?

Tom McCann: It's not going to impact the flow in the river.

Ted Simons: We got to clear it up. Urban users not within the next five years. Could be years 15, something along those lines.